Bank of England left policy unchanged

At its December 14 meeting, the Bank of England (BOE) left the benchmark interest rate at 0.5% after a rate hike in November. Such decision came totally in line with the market’s expectations.

The Monetary Policy Committee (MPC) repeated that “further modest increases” of the rate would probably be needed over the next few years if the economy performed as expected. The MPC, however, didn’t give any further details about the timing of these future rate hikes. Traders do not expect another increase until the end of 2018.

All MPC members voted to keep the monetary policy unchanged. The central bank acknowledged the progress in Brexit negotiations. According to the BOE, the latest developments reduce the chance of Britain’s disorderly parting with the EU.

On the economic front, the regulator pointed out to a weaker-than-expected economic growth this quarter and concerns about an unwelcome increase in domestic inflation pressures.

GBP/USD has been trading in a volatile fashion between 1.3410 and 1.3465.